drilling

Almost six years ago, our state government made it practical for large drilling and fracking operations to begin in New York. None have, as of yet.

Back in 2008, the Department of Environmental Conservation slipped through the legislature a seemingly inconsequential bill. It amended the list of spacing-units for oil and gas drilling in New York to include units for shales, thereby enabling drilling into shales without a hearing to set the individual unit size for each well. This bill was not on the DEC’s list of legislative goals for the year, and no hearings were held about it. Instead, the bill was introduced in the rush of legislation at the end of session, and passed both houses overwhelmingly.

Some legislators said they voted for it assuming that since the bill was presented by the DEC, it was pro-environment. Afterwards, legislators heard from unhappy constituents. Before Governor Paterson could sign the bill, the Assembly liaison to DEC (Lupardo) scheduled public meetings on the topic.

At the first meeting, in the town of Chenango, Broome County, the state was represented by Division of Mineral Resource’s regional supervisor (Collart) with other representatives from the Farm Bureau and Susquehanna River Basin Commission. Even before the standard Division slide show was over, the panel was bombarded by questions. They were unable to offer satisfactory answers.

The next night in Greene, Chenango County, the panel was replaced by heavy hitters from Albany: the director of Bureau of Oil and Gas for DMR (Dahl), the deputy commissioner of DEC (Gruskin), and the chief environmental advisor to the Governor (Enck) — but with similar results. The uproar convinced Paterson that there were too many unknowns to permit this new form of drilling combined with high-volume hydraulic fracturing (HVHF). As a compromise, the Governor signed the bill but required that a Supplemental Generic Environmental Impact Statement would be written before drilling and fracking could begin. At the time (July 2008), the completion of this SGEIS was expected to take less than a year.

Had the DEC waited to prepare even a minimal SGEIS before the spacings bill was passed, questions could have been answered and drilling could have begun following the signing. Instead, after more than half a decade, there is no certainty if or when the moratorium will be lifted.

After a draft scoping document and public hearing, a first draft of the SGEIS itself was released in September of 2009, occasioning a barrage of criticism. Over 13,000 comments were submitted — far surpassing the 204 comments received by the 1988 draft GEIS, the first guide to environmentally safe drilling. The administration decided that a second draft was required.

When Andrew Cuomo became governor in January of 2011, the revised draft was still not released – two years after the first draft and three after the start of the moratorium. While Cuomo signed an executive order to continue the moratorium on HVHF, he required the speedy completion of the SGEIS by July. Most of the revised draft was released by his deadline, but a cumulative impact appendix was not added until September of that year.

Public comments were taken on the revised draft, both at hearings and in writing. The response was even greater. Over 60,000 comments were received, most of them critical of drilling. Apparently this made an impression, as did the frequent public protests.
So time passed with no obvious progress. Because of a statutory deadline, in November of 2012 a series of regulations were proposed to implement some guidelines of the SGEIS, even before those guidelines had been finalized. But after much criticism and over 200,000 comments (mostly opposed), those proposed regulations were withdrawn.

Repeatedly, the Governor has missed his own deadlines for deciding whether or not to allow HVHF in New York. For the last year or so, he has claimed to be waiting on a review by the state health commissioner Shah. His indecision may have more to do with public ambivalence about fracking. For years, Quinnipiac and Sienna opinion polls have been closely divided on the question of drilling, though recently there has been a slight plurality opposed.

The prospects for drilling in New York are nowhere near as promising as in Pennsylvania. Yet pro-drilling groups have hyped the potential from the start, including leasing coalitions such as Joint Landowners Coalition NY, industry groups such as Independent Oil & Gas Association-NY, and government agencies such as the NYS Division of Mineral Resources. Although this agency has the primary responsibility for oversight of the oil and gas industry in New York, the DMR is essentially an industrial development agency, required by law to maximize production and minimize product left in the ground.

While their hyping of the prospects built a groundswell of support for drilling, it has had the unintended consequence of building an even more vocal opposition. As a result, New York is the only state that has a moratorium in place while the environmental impacts of HVHF are being evaluated. Had it been public knowledge from the start that shale gas prospects are few in the Catskills and the Finger Lakes regions, there would likely be drilling right now along the border with Pennsylvania.

Ironically, the pro-drilling faction bears much of the responsibility for the moratorium. Their earlier, short-sighted attempt to expedite horizontal drilling and HVHF by forgoing an SGEIS prior to enabling legislation led to the moratorium. Under Cuomo, their hyping the prospects of drilling rallied the opposition, encouraging the endless delaying of his decision, thus extending the moratorium. Otherwise, this sort of drilling might have begun in New York years ago.

For fiscal year 2014/15, the state budget has no funds to begin regulating shale drilling, and the Commissioner of DEC has indicated that issuing the necessary permits is “highly unlikely” in the next fiscal year – in other words, not until after the next election for governor.

But just last month, the Joint Landowners’ Coalition of New York and some land owners have petitioned the state under Article 78 of Civil Practice Law and Rules to (among other things) force release of the SGEIS and issuance of the Findings Statement – the final steps in the SGEIS process. Still, with appeals likely, the final judicial decision may come no sooner than the governor’s.

And what might Cuomo’s decision on the HVHF eventually be? He has presidential ambitions and like most mainline Democrats, strongly supports the use of natural gas. In his draft New York Energy Plan (2014); Volume 2, Sources; Chapter 2, Natural Gas Report, New York Production Forecast, he writes: “As shown in Figure 32, the State’s annual natural gas production was expected to more than triple to about 115 Bcf in 2035. However, this forecast is predicated on the ability to produce from New York’s shale reserves.”

Future production of shale gas from Marcellus wells in New York has been hyped by industry lobbyists, leasing coalitions, and the Division of Mineral Resources (DMN). In reality, the producing region would be small and production modest.

Four features of the shale largely control gas production within the Marcellus: organic content, maximum temperature, thickness, and depth.

For shale gas to have been created, there must have been source material and it must have been heated enough – but not too much.

As shale is heated, organic matter breaks down to kerogen, kerogen to oil, oil to methane, and finally methane to carbon dioxide and water.

For most of the Southern Tier, the Marcellus had enough organic matter to create gas and was heated enough to yield methane. However, beneath the Catskills and some surrounding regions, the shale is barren and over-cooked.

For there to be enough gas to be profitably produced, the shale layer must be thick enough and deep enough.

Where the shale is thickest, there is the most rock to drain gas from. Where the shale is deepest, the most gas is squeezed into the natural spaces. Also, the maximum difference in pressure is there (between the rock and the well) to push the gas out of the shale.

Just across the border in Pennsylvania, thousands of horizontal shale wells have been drilled during the last few years. Results in PA’s Northern Tier can tell us about the prospects for gas production here in the Southern Tier.

We compared production in each town with the underlying geology of the Marcellus Shale. Production is greatest in the “sweet spot,” where the counties of Susquehanna, Bradford, and Wyoming meet. There the shale layer is thick and deep.

The “sweet spot,” where the counties of Susquehanna, Bradford, and Wyoming meet

Away from the sweet spot, production drops off sharply as the shale layer thins and shallows. Production depends on the volume of shale fracked, which decreases with the square of the thickness. Production also depends on the depth of shale, and falls to zero as the shale layer reaches the surface where the pressure is zero.

For example, the shale in Franklin is a third as thick as in the sweet spot (100’ vs. 300’), meaning there is one ninth the volume of rock to be fracked. In addition, the shale layer here is half as deep as in the sweet spot (3,500’ vs. 7,000’), meaning pressure differential is half as great. The result is that production in Franklin would be one eighteenth (1/9 x 1/2) of that in the sweet spot, i.e. only five percent.

Looking at the whole of the Southern Tier, production would be comparatively low in the vast majority of towns. Drilling would be most profitable in the border towns of Broome and Delaware counties. As you would expect, recent applications for five drilling permits by XTO (a subsidiary of Exxon) are for the adjacent towns of Sanford, in Broome County and Deposit, in Delaware County.

Should gas prices rise, we expect that the fairway for drilling (i.e. where drilling would be profitable) would expand further into the border towns of Chemung and Tioga counties, as well as to additional towns in Broome and Delaware.

These results should not come as a surprise because academia and industry have been forecasting fairways of a similar extent since the Marcellus boom began. However, in the Supplemental Generic Environmental Impact Statement, the DMN has spread confusion by depicting the Marcellus fairway as including the whole of the eastern half of the Southern Tier, all the way to where the shale breaks the surface in visible outcroppings.

A low potential for production does not guarantee that there will be no drilling in a county. Small operators are incurable optimists. In the Northern Tier of Pennsylvania, counties with low potential such as Potter and McKean now have dozens of horizontal wells – despite every well being a low producer.

Costs of drilling could be substantial to people and towns. But outside of the fairways, the benefits of drilling from royalties could be meager. The only way a town can guarantee control of the costs of drilling is by exercising its home rule powers through local zoning.

State-wide comprehensive regulation, rigorously enforced, could reduce costs – although not eliminate them. But after five years of moratorium, we are no closer to either. Regulations were proposed and then dropped. (The DMN is operating with regulations codified in the 1970s, with none resulting from the GEIS.)

The governor’s Advisory Committee on Hydraulic Fracturing, which is to plan for the practical details of financing and staffing, has not met in almost two years. And while the industry talks of “safe and responsible drilling,” it works relentlessly to avoid safe regulations and taking responsibility for the consequences of its actions.